Swap clearing is not just for the big banks. State Street’s announcement is further proof of that. With (lots of) money and a high credit rating, client clearing could be a good business for you. My upcoming research study, for which I spoke with two dozen swaps dealers, will provide more detail into how these non-G14 banks will compete in the new swaps world. In the mean time, expect more similar press releases over the coming months.
Kevin McPartland, head of fixed-income research at Tabb Group, a consultancy, said: “The custodian banks see clearing as a huge opportunity because they are very well capitalised and have high credit ratings and are very focused on a post trade processing already. So it makes a lot of sense that they would step in as a clearing broker.”